The cost of producing documents and electronically stored information (“ESI”) in civil litigation today can be prohibitive for small companies and individual litigants—especially given the presumed need to hire third-party e‑discovery vendors to conduct forensic searches of email files, text messages, and other sources of ESI. In McCabe’s Mechanical Service Inc. v. Ballweg, 2020 Del. Ch. LEXIS 141 (Order, Apr. 9, 2020), the individual defendant, Ballweg, responded to requests for production of documents by searching his own emails and text messages and producing responsive documents.
Such “self-production” is usually frowned upon by the Delaware Court of Chancery. However, in Ballweg, the defendant asserted that his production was “adequate and complete.” The plaintiff, McCabe’s, was unconvinced, and demanded that Ballweg hire a third-party e-discovery vendor to conduct a forensic search of his files. McCabe’s filed a motion to compel discovery and Ballweg opposed, arguing that a third-party vendor “was an unnecessary expense given the scope of the claim.”
Vice Chancellor Sam Glasscock III came up with a creative solution, issuing an order first requiring Ballweg to provide an affidavit affirming “that he had responded fully to all relevant document requests, including requests for ESI.” Then, if McCabe’s still maintained that a third-party vendor was necessary, the parties would confer and agree on a vendor to conduct the searches—but at McCabe’s expense. If the third-party vendor’s search of Ballweg’s ESI revealed either that his production was incomplete or that he had spoliated evidence, then the cost of the third-party vendor would be shifted to Ballweg.
The Court of Chancery Rules were amended as of July 1, 2019 to adopt the language from the Federal Rules of Civil Procedure that allows a party to take discovery into “any non‑privileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case.” Vice Chancellor Glasscock’s order in Ballweg appears to be a significant application of that “proportionality” standard. It could easily serve as a model for other cases in which the cost of hiring an e‑discovery vendor is not “proportional to the needs of the case.” Shifting costs first to the party seeking discovery and then to the producing party if the production is inadequate would create positive incentives on both sides, encouraging the requesting party to accept a less expensive mode of production while also motivating the producing party to conduct a diligent search and make a complete production.
Following the example set in Ballweg, litigation counsel representing individual or small-business parties should consider seeking provisions in a discovery plan or order that would implement the Ballweg procedure—which could substantially reduce the burden and expense of ESI production on their clients.
James G. (Jay) McMillan is a partner in the Wilmington, Delaware office of Halloran Farkas + Kittila LLP. He concentrates his practice in complex corporate and commercial matters, with a particular focus on litigation in the Delaware Court of Chancery. For more information on the firm, visit hfk.law.